Chronology of events:
At the end of February 2022, due to geopolitical developments between Russia and Ukraine the liquidity situation of the bank and its subsidiaries significantly deteriorated within a very short period (name crisis, classical deposit run-off). At the same time, the management of Sberbank Europe intensified alignment with the authorities on the way forward, and different levels of internal escalation procedures were applied. 

On 25 February 2022 due to the serious liquidity situation, the Group Recovery Plan was triggered and recovery options initiated; the main one being the Emergency Liquidity Funding from the owner SBRF that could not be provided due to the sanctions prohibition imposed by the Russian Federation. 
Additionally Emergency Liquidity Assistance (“ELA”) was requested on 25 February 2022 from the Austrian National Bank (“OeNB”) and the European Central Bank (“ECB”). On 26 February 2022, the Management Board of Sberbank notified the authorities on the reasonable expectation that Sberbank was failing or likely to fail (“FOLTF”) in the near future in case ELA would not be provided. 

On 27 February 2022, OeNB Informed Sberbank that ELA would not be provided, and the national resolution authorities imposed moratoria on Sberbank and most of its subsidiaries until 1 March 2022 23:59. 

In this period, the national resolution authorities outside of the European Union conducted the following steps that ultimately resulted in the sales of the subsidiaries conducting business in their jurisdictions:
  • The Federation of Bosnia and Herzegovina Banking Agency (“FBA”) appointed an external administrator for Sberbank BH d.d. Sarajevo on 27 February 2022# and informed of the transfer of ownership of all of SBBH’s shares to ASA Finance d.d. Sarajevo on 1 March 2022#;
  • On 1 March 2022# the Banking Agency of Republika Srpska, (“BARS”) published its decision to initiate the resolution process of Sberbank a.d. in Banja Luka (“SBBL”) and informed on 3 March 2022# that it had adopted a resolution plan selling all shares of SBBL to Nova Banka a.d. in Banja Luka.
  • The National Bank of Serbia issued a press release on 28 February 2022# according to which it had taken a resolution decision which enabled the central bank to directly sell all of the bank’s shares to AIK Banka in Beograd;

Two out of four Sberbank’s subsidiaries within the European Union, lost their banking licenses and wind-down procedures were initiated by the authorities:
  • On 28 February 2022 the Czech National Bank issued a press release# according to which it had launched steps towards the revocation of the banking license of Sberbank CZ (“SBCZ”) and had taken preliminary measures preventing SBCZ from disposing of assets and liabilities, including the provision of new loans and accepting deposits;
  • On 1 March 2022, the Central Bank of Hungary (“MNB”) informed# that due to the serious liquidity and capital problems of Sberbank’s Hungarian subsidiary it had revoked its banking license and had ordered its winding up.

Further on 1 March 2022 the SRB decisions# were published which outlined the sale of Sberbank Europe’s subsidiary in Croatia to Hrvatska Postanska Banka and Slovenia to Nova Ljublanska Banka and the decision not to take resolution actions for Sberbank.
The SRB decision regarding Sberbank was implemented via the Austrian Financial Market Authority (“FMA”) decision on 11 March 2022 (“Mandatsbescheid” FMA-KI23 5492/0006-SIG/2022) which prohibited Sberbank to continue its orderly business activities and nominated a Government Commissioner to monitor its operations thereafter. The moratorium implemented by FMA triggered the activation of the Austrian Deposit Guarantee Scheme.

After the resolution actions, five banking subsidiaries of Sberbank Europe were sold, and two other banking subsidiaries have been going through wind-down procedures. To maintain appropriate capital adequacy and avoid potential breaches due to the negative effects on Sberbank Europe’s equity, Sberbank of Russia (“PJSC Sberbank”) offered a ‘Contribution in Kind’ in the amount of EUR 600 million of liabilities issued by Sberbank Europe and held by Sberbank of Russia. The liabilities in question were a EUR 325 million of Senior Non-Preferred loan and two tranches of Tier 2 eligible Subordinated Loans in the amounts of EUR 175 million and EUR 100m. Sberbank Europe accepted the offer for the contribution in kind from Sberbank of Russia  as of 23 March 2022 on 30 March 2022.

This led to an increase in Sberbank Europe's equity and an improvement in its own funds. As an individual institution, Sberbank Europe met the regulatory capital requirements throughout the period while holding banking licence.  

Furthermore, Sberbank Europe’s management immediately and simultaneously started negotiations to sell bank assets (loan and bond portfolios) in order to increase liquidity in order to fulfill upcoming liquidity needs for repaying liabilities coming due including the repayment of the liability towards ESA.

In order to implement the sales proceedings, an extraordinary general assembly held on 21 April acknowledged the sale of loan and bond portfolios. In the same general assembly, the liquidation of Sberbank Europe was approved and the former Sberbank Europe management was appointed as liquidators, empowered to return the banking license of Sberbank Europe after the banking business of the bank is wound-up.

Portfolio sale agreements with various investors were signed until and including on 2 May 2022, with all sales transactions being closed on 3 May 2022 after approval of the Government Commissioner. The sales generated liquidity allowing the bank to reimburse EUR 948.6 million ESA for covered deposits. 
Furthermore, the contribution in kind received in March 2022, lead to a more comfortable compliance with all solvency related requirements after being considered by accounting from 31 March 2022 onwards.
Developments of the wind-down process and lapsing of the banking license

A bank may only return its banking license in cases where all banking transactions have previously been settled. It was concluded that Sberbank Europe AG in Abwicklung took all conceivable and economically justifiable measures to close the banking transactions and that the remaining transactions have negligible residual size, so that the banking license was returned on 15 December 2022.

The vast majority of customer depositors were paid out except in the cases where the transfer could not be made directly to the clients due to limitations caused by sanctions or other reasons. The necessary funds for such retail deposits were either deposited with the court or, in the sad case of a depositor deceasing, settled with the estate. The outstanding balances of the corporate deposits were either deposited at court or are in the process of repayment. The liquidity necessary to ensure the repayment of these outstanding balances was reserved on the Escrow account to fulfil the obligations from Sberbank Europe.

Regarding loans that remain on the books as at 31 December 2022 Sberbank Europe, wherever possible, seeks to reach agreement with the debtors to terminate the contract early or sell the loan to another investor/bank. In some cases this was not possible due to sanctions or other reasons, in which case these loans are be kept on the books of Sberbank Europe for regular repayment purposes. 

For the remaining guarantee transactions liquidity was reserved on an escrow account at the Notar Treuhand Bank based on a specific escrow agreement aimed at ensuring the necessary liquidity for all possible calls of the guarantees.  After reserving the liquidity for potential pay out on sub-accounts at the Notar Treuhand Bank these would no longer be considered as banking business in accordance with the rules and regulations (§ 1 para. 1 Z 8 BWG).

It is the expectation of the remaining two liquidators of Sber Vermögensvervaltung AGto finalize the tasks set out in the plans and finish the liquidation process by 31 December 2023. The 9th EU sanction package does not prohibit Sberbank of Russia the sale of the entity until 17 July 2023.

Sber Vermögensverwaltungs AG in Abwicklung
Schwarzenbergplatz 3
1010 Vienna, Austria

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